Why U.S. Insurance Companies Keep Covering Fossil Fuels – and What We’re Doing About It
Many investors – and especially Green Century Funds° investors – can imagine a safer, healthier fossil fuel-free future. That’s why Green Century’s advocates work to convince companies to reduce greenhouse gas emissions, protect forests, source renewable energy and more. But as wildfires, floods and extreme temperatures have become more common and climate risk has grown for businesses, we’ve focused on another key driver of the climate crisis: the insurance industry.
Oil and gas corporations need insurance to move forward with fossil fuel exploration and extraction. By refusing to cover these environmentally harmful projects, insurance companies could play a positive role in addressing climate change and avoid significant climate risk: global insured losses from natural disasters last year were estimated at $132 billion, making 2022 the fifth costliest year for insurers on record.
Shareholder Advocate Andrea Ranger poses outside Travelers’ annual meeting before presenting Green Century Funds’ proposal to phase out coverage of new fossil fuel projects.
While some European companies have stated they will no longer insure certain types of new oil and gas projects, the U.S. insurance industry has made no such moves. In fact, as U.S. insurers continue to cover major drivers of the climate crisis, they’re sticking customers with the costly consequences: State Farm,* the largest homeowner insurance company in California, announced last month that it would stop selling coverage to homeowners – not just in wildfire zones, but everywhere in the state.
To convince U.S. insurers to keep up with evolving global standards and avoid future losses associated with a warming planet, Green Century led a shareholder advocacy program this year with three of the world’s largest insurers: Chubb*, The Hartford*, and Travelers,* asking each company to phase out the underwriting of new fossil fuel projects.
Our dialogues with each company were informative, but none agreed to phase out new fossil fuel projects. The Green Century Funds filed shareholder resolutions with the companies so that shareholders could weigh in on whether insurers should continue to underwrite some of the activities most directly responsible for warming our planet.
While no climate-related proposals at insurance companies won majority support this shareholder season, Green Century helped the issue gain widespread visibility, increased board-level discussion, and heightened investor awareness. Going forward, we’ll build on our momentum to drive forward this long-term program to build a green, fossil fuel-free future for our children and grandchildren.
One way you can make an impact is to sign this petition from our nonprofit owners at PIRG urging these three companies to stop insuring climate risks. Fossil fuels won’t go the way of the dinosaur overnight, but sustained pressure from investors, advocates, and everyday people can and will continue to win meaningful policy change in the years to come.
As always, thank you for your support of the Green Century shareholder advocacy program through your investments to make our planet a cleaner, greener, healthier place.
About Green Century Funds
°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (The Funds). The Green Century Funds are one of the first families of fossil fuel-free, environmentally responsible mutual funds. Green Century hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
*As of March 31, 2023, Chubb Ltd. comprised 0.00%, 0.44%, and 0.00%, The Hartford Financial Services Group, Inc. comprised 0.00%, 0.12%, and 0.00%, and Travelers Companies, Inc. comprised 0.88%, 0.22%, and 0.00%, of the Green Century Balanced Fund, the Green Century Equity Fund, and the Green Century International Index Fund, respectively. As of the same date, other securities mentioned were not held in the portfolios of any of the Green Century Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
The percentage in favor was calculated by (i) dividing the number of votes in support of the proposal by (ii) the sum of the number of votes voted in support of and against the proposal. Abstentions and broker non-votes were not included in the calculation.
You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please visit www.greencentury.com, email info@greencentury.com, or call 1-800-934-7336. Please read the Prospectus carefully before investing.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk.
This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 235 W Galena Street, Milwaukee, WI 53212. 6/23
